Reactions: Payback for Previous Strength and Weather Disruptions

Economists appear to be largely looking past weakness in the March payrolls report, noting that strength in the previous months was unsustainable. Weather also appeared to play a role, economists said.

Joseph Brusuelas, chief economist, RSM US LLP: "For the past several months the labor market has been on fire, growing at a pace of 211,100 over the past six months, which given where the economy is in the business cycle amidst a tight labor market is simply not sustainable. In our estimation, seasonal issues aside, investors should get ready to observe more employment reports such as the tepid March estimate."

Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co.: "US jobs growth slowed in March more than expected, but the details of the report suggest investors and policymakers will look through it. The poor weather seemed to have played a role. Construction jobs fell (15k) for the first time since last July, and the hours worked by production employees and non-supervisory worker slipped."

Jim O'Sullivan, chief U.S. economist at High Frequency Economics: "The weakness in payrolls likely reflected payback for exaggerated strength rather than weather effects in March alone. While there is no direct measure of weather effects in payrolls, the not seasonally adjusted household survey series on the number of nonfarm workers with a job who did not work because of bad weather fell by 100K, similar to the 106K median decline in the past 10 Mar reports."

Andrew Chamberlain, chief economist at Glassdoor: "One surprise in today’s report was stronger than expected wage gains. Average hourly earnings rose 2.7 percent from a year ago, creeping above the roughly 2.5 percent to 2.6 percent pace we’ve seen over the past year. That’s good news for workers, but it’s a pace still well below the 3 percent to 4 percent pace of wage gains we enjoyed before the Great Recession."

Who Got a Raise in March? Miners and Loggers

Average hourly earnings rose 0.3% in March from the prior month, continuing a modest pace of growth.

High-paying industries such as financial services and tech often see the largest earnings growth in the monthly data. But this month miners and loggers took the lead. Here are the sectors where average hourly earnings rose the most.

Mining and logging: 0.8% to $32.64/hour

Financial activities: 0.6% to $34.50/hour

Utilities: 0.6% to $39.97/hour

Professional and business services: 0.5% to $32.20

Transportation and warehousing: 0.5% to $24.35

Chelsey Dulaney

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'Mixed' Report Dilutes Bond Market Reaction

In recent trading, the yield on benchmark 10-year U.S. Treasury note was 2.810%, according to Tradeweb, compared with 2.819% just before the jobs report and 2.830% Thursday.

The jobs report presented “a bit of a mixed picture” and, “as a result, the Treasurys market has not a done a great deal with the release,” said John Canavan, market analyst at Stone and McCarthy Research Associates.

Jim Vogel, a rates strategist at FTN Financial, added, in a research note: "The always odd payroll calculations were due for a slip, so 103k wasn’t all that remarkable in the overall scheme of 1H 2018. What was more surprising was the 63k downward revision to January. That collapsed what had been an upward slope to the last 2 years of payroll growth and implicitly reduced the upward pressure on wages that so many are still certain will arrive this year."

Sam Goldfarb, Ben Eisen

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Backing Off Bets on An Aggressive Fed

The lackluster headline jobs number has some investors backing off expectations for a more rapid pace of Fed rate increases. In the fed funds futures market, the derived probability of at least four rate increases in 2018 is at 26%, down from 29% before the report a high of 38% last month.

"Overall, a disappointing release which brings into question the medium-term trend for the jobs market," said BMO rates strategist Ian Lyngen in a note to clients.

The yield on the 10-year Treasury note was recently down 0.02 percentage point at 2.808%, according to Tradeweb.

Ben Eisen

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Underemployment Edges Lower But Still Elevated

The so-called underemployment rate--which includes workers who are unemployment, working part-time or too discouraged to look for work--fell to 8% in March from 8.2% in the prior month.

Still, the rate remains elevated compared to where it was when the headline unemployment rate was this low. In December 2000, the underemployment rate was at 6.9%.

Labor Force Participation Edges Lower

The share of American adults working or looking for a job fell by 0.1 percentage point to 62.9% in March. The rate is up slightly from a recent low of 62.3% in 2015, but still near the smallest share of adults participating since the late 1970s, a time when women were still entering the workforce in greater numbers.

Eric Morath

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Payrolls Change in Context

Nonfarm payrolls are up 1.5% over the last 12 months. Here's what the trend in hiring looks like over a longer stretch.

Becky Bowers

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Markets Edge Lower

Stock futures have edged slightly lower after the release of the jobs report. S&P futures are pointing down 0.9% while Dow futures are down 1%. Futures had already been down before the report as investors digest rising U.S.-China trade tensions.

The 10-year Treasury yield also edged lower to 2.8%, while the dollar has slipped 0.2% against major peers.

Chelsey Dulaney

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Where the Jobs Are Coming From

Manufacturing employment rose by 22,000 in March, with all of the increase taking place in the durable goods component. The mining sector also added 9,000 jobs last month. Employment in health care increased by 22,000 in March, while the retail sector shed 4,400 jobs.

Harriet Torry

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Revisions Subtract 50,000, But Hiring Remains Strong

Figures for January and February were revised, subtracting 50,000 jobs from the first two months of the year. The U.S. added 326,000 in February and 176,000 in January.

Still, through the first three months of the year, employers have added an average of 202,000 workers to payrolls, outpacing 2017's average monthly growth of 182,000. That runs counter to economists' expectation for hiring to broadly ease as the labor market tightens.

Ben Eisen, Eric Morath

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Year-Over-Year Wage Gain 2.7% In March

Average hourly earnings for private-sector workers rose to $26.82 in March from the previous month. The figure is 2.7% above the hourly wages workers saw in March last year, which is broadly in line with the moderate pace of wage gains so far this year.

Harriet Torry

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Unemployment Rate Holds at 4.1%

The unemployment rate held at 4.1% in March for the sixth straight month. Economists had expected the rate to fall to 4.0%.

The unemployment had been holding steady as an influx of new workers into the job market offsets strong hiring. Economists and Fed policymakers expect the unemployment rate will fall further in the months ahead, which has sparked some concerns about the labor market overheating.

Chelsey Dulaney

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103,000 Jobs Added Last Month

The U.S. added 103,000 jobs last month, the data show. That's below expectations of 178,000.

Ben Eisen

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Probability of Ramped-Up Rate Increases Falls

Traders in the fed funds futures market are scaling back expectations that the Federal Reserve will lift rates at least four times this year. The probability was at 29% Friday morning ahead of the report, down from a high of 38% last month, according to CME Group.

The Fed has already lifted rates once in 2018 and penciled in two more this year, but some believe they could add a fourth if inflation and wage growth pick up. That makes this jobs report an important consideration for the Fed.

Ben Eisen

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There’s Still a Little Slack in the Job Market

The unemployment rate’s expected decline to 4% is likely to be seen as evidence of the U.S. labor market’s increasing tightness.

But broader measures of employment--such as the underemployment and labor force participation rates--continue to show there’s still room for people to join the workforce. That should help keep a much-anticipated acceleration in U.S. wages and inflation in check for now.

Markets Pointing Lower

Investors will have a lot of focus on as the jobs report arrives. As the moment, the markets are pointing to a lower open after President Donald Trump threatened a major escalation in trade tensions with Beijing on late Thursday. We'll see if the focus shifts as the numbers hit.

Futures on the Dow indsutrials were down about 1% ahead of the report while futures on the S&P 500 were down 0.9%.

The yield on the 10-year Treasury note was dow 0.01 percentage point at 2.82%. The WSJ Dollar Index was up slightly.

Ben Eisen

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We Don’t Need No Education

The unemployment rate for those with less than a high-school diploma has been falling at a fairly sharp rate since the middle of 2016.

Meanwhile, the jobless rate for those with a college degree has plateaued, and even edged up slightly this year. It’s a sign hiring is drawing in those most difficult to employ, while the labor market for highly skilled workers is less tight now than in the late 1990s.

Eric Morath

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Wage Question

Bringing workers off the sidelines could be helping hold wages in check, despite what appears to be a tight labor market. The year-over-year gain in average hourly earnings has not topped 3% since the recession ended in 2009.

There has been some recent, modest upward pressure on wages. Look to see if that momentum is maintained, or if it fizzles, as has happened at several previous points in the current expansion.

Eric Morath

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Put Me In, Boss

Businesses have been able to add workers without pushing down the unemployment rate further in recent months by enticing people who are out of the labor force to work. Those can include students, stay-at-home parents, those with disabilities and those previously too frustrated by their prospects to look for jobs. Watch to see if the labor-force participation rate can top 63% for the first time since 2014.

Eric Morath

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A Fresh Low

Economists project the jobless rate will fall to 4% for the first time since 2000. (They expected it to happen in February, too, but the rate held at 4.1% for the fifth straight month.)

An unemployment rate of 4% or less is extremely rare in the past 70 years of modern record-keeping. It has only occurred in the immediate aftermath of World War II, again when young men were being drafted into wars in Korea and Vietnam, and briefly at the end of the 1990s tech boom.

The question, if the rate falls, is can a pattern be maintained for several years? Or is it a sign the economy is starting to overheat?